Bombardier Announces Financial Results for the Second Quarter Ended June 30, 2013

August 1, 2013Montréal
Bombardier Inc.,
Press Release

(All amounts in this press release are in U.S. dollars unless otherwise indicated. This press release contains both IFRS and non-GAAP measures. Non-GAAP measures are defined and reconciled to the most comparable IFRS measures in the Corporation’s MD&A. See Caution regarding Non-GAAP measures at the end of this press release. Comparative figures have been restated. See Accounting and reporting developments in the Corporation’s MD&A.)

Revenues of $4.4 billion, compared to $4.1 billion last fiscal year

EBIT before special items(1) of $257 million, or 5.8% of revenues, compared to $214 million, or 5.2%, last fiscal year

EBIT of $288 million, or 6.5% of revenues, compared to $214 million, or 5.2%, last fiscal year

Adjusted net income(1) of $158 million, compared to $167 million last fiscal year

Adjusted EPS(1) of $0.09, same as last fiscal year

Free cash flow usage(1) of $566 million, compared to a usage of $608 million last fiscal year

Available short-term capital resources of $4.5 billion, including cash and cash equivalents of $3.1 billion as at June 30, 2013, compared to $4.0 billion and $2.6 billion respectively, as at December 31, 2012

Record backlog of $65.5 billion as at June 30, 2013, compared to $64.9 billion as at December 31, 2012

(1) See Caution regarding Non-GAAP measures at the end of this press release.

Bombardier today reported its financial results for the second quarter ended June 30, 2013. Revenues totalled $4.4 billion for the second quarter ended June 30, 2013, compared to $4.1 billion for the same period last fiscal year.

For the second quarter ended June 30, 2013, earnings before financing expense, financing income and income taxes (EBIT) before special items totalled $257 million, or 5.8% of revenues, compared to $214 million, or 5.2%, for the same period last year.

On an adjusted basis, net income amounted to $158 million, or earnings per share (EPS) of $0.09, for the second quarter ended June 30, 2013, compared to $167 million, or EPS of $0.09, for the same period the previous year.

For the three-month period ended June 30, 2013, free cash flow usage (cash flows from operating activities less net additions to property, plant and equipment and intangible assets) totalled $566 million, compared to a usage of $608 million for the same period last year. As at June 30, 2013, available short-term capital resources of $4.5 billion included cash and cash equivalents of $3.1 billion, compared to $4.0 billion and $2.6 billion respectively as at December 31, 2012. The overall backlog reached a record $65.5 billion as at June 30, 2013, compared to $64.9 billion as at December 31, 2012.

“As expected, our second quarter results showed progress in revenues, EBIT and free cash flow,” saidPierre Beaudoin, President and Chief Executive Officer, Bombardier Inc. “Transportation had a good second quarter with increases on all fronts; revenues and free cash flow improved, EBIT margin reached 6.9% and the level of new orders continued strong with a book-to-bill ratio of 1.5.”

“Aerospace also performed well with increased profitability and free cash flow, and a record backlog. The CSeries development is making good progress with some of the major milestones already successfully met; the geared turbofan engines are running smoothly and powering key aircraft systems, and the latest software upgrades continue to be successfully implemented. We’re now in the final testing stage in preparation for first flight in the coming weeks.”

“The outlook for both groups is positive. Our record backlog of $65.5 billion, combined with our significant investments in new products, ensure solid growth in the years to come,” concluded Mr. Beaudoin.

Bombardier Aerospace

Bombardier Aerospace’s revenues amounted to $2.3 billion for the three-month periods ended June 30, 2013 and 2012. EBIT before special items totalled $107 million or 4.7% of revenues for the second quarter ended June 30, 2013, compared to $99 million, or 4.4%, last fiscal year.

Free cash flow usage totalled $459 million (including net addition to property, plant and equipment (PP&E) and intangible assets of $534 million) for the second quarter ended June 30, 2013, compared to a usage of $504 million (including net addition to PP&E and intangible assets of $481 million) for the same period last fiscal year.

Bombardier Aerospace delivered a total of 57 aircraft during the second quarter ended June 30, 2013, compared to 62 for the same period last fiscal year, and received 82 net orders during the second quarter, compared to 146 for the same period last fiscal year.

The Business Aircraft division received significant orders during the second quarter. VistaJet placed an order for 20 Challenger 350 jets, valued at $518 million based on list price, with options for an additional 20, and an undisclosed customer placed an order for 12 Global 8000 jets, valued at $804 million based on list price. In Commercial Aircraft, Ilyushin Finance Co. (IFC) of Russia firmed up an agreement for 32 CS300 aircraft with options for an additional 10. The firm order is valued at $2.6 billion, based on list price.

Bombardier Aerospace’s backlog totalled a record $33.4 billion as at June 30, 2013, compared to $32.9 billion as at December 31, 2012.

Bombardier Transportation

Bombardier Transportation’s revenues amounted to $2.2 billion for the three-month period ended June 30, 2013, compared to $1.8 billion for the same period last year. EBIT totalled $150 million, or 6.9% of revenues, compared to $115 million, or 6.3%, for the same quarter the previous year. Free cash flow usage totalled $21 million for the quarter ended June 30, 2013, compared to a usage of $44 million for the same period last fiscal year.

New orders reached $3.2 billion (book-to-bill ratio of 1.5), compared to $2.9 billion for the same quarter last fiscal year. The order backlog totalled $32.1 billion as at June 30, 2013, compared to $32.0 billion as at December 31, 2012.

During the second quarter ended June 30, 2013, in addition to several small and medium orders won across all segments and geographies, Bombardier Transportation further strengthened its position as market leader by securing three large and strategic tenders in Europe. The group signed a frame agreement with Deutsche Bahn AG (DB) for up to 450 electric locomotives for a value of up to $2 billion under which it received a first firm order for 130 locomotives for a value of $573 million. This is the biggest contract for electric locomotives in Bombardier Transportation’s core European markets over the past several years. The group also signed one of the largest metro orders in Europe in recent history with SL, the Stockholm Public Transport Authority, for 96 new generation MOVIA C30 metro vehicles valued at $771 million. Finally, the group won an order from the S-Bahn Hamburg GmbH, a subsidiary of DB, to deliver 60 new single and dual-voltage commuter trains valued at $427 million.

DIVIDENDS ON COMMON SHARES

Class A and Class B Shares

A quarterly dividend of $0.025 Cdn per share on Class A Shares (Multiple Voting) and of $0.025 Cdn per share on Class B Shares (Subordinate Voting) is payable on September 30, 2013 to the shareholders of record at the close of business on September 13, 2013.

Holders of Class B Shares (Subordinate Voting) of record at the close of business on September 13, 2013 also have a right to a priority quarterly dividend of $0.000390625 Cdn per share.

DIVIDENDS ON PREFERRED SHARES

Series 2 Preferred Shares

A monthly dividend of $0.0625 Cdn per share on Series 2 Preferred Shares has been paid on May 15, June 15 and July 15, 2013.

Series 3 Preferred Shares

A quarterly dividend of $0.195875 Cdn per share on Series 3 Preferred Shares is payable on October 31, 2013 to the shareholders of record at the close of business on October 18, 2013.

Series 4 Preferred Shares

A quarterly dividend of $0.390625 Cdn per share on Series 4 Preferred Shares is payable on October 31, 2013 to the shareholders of record at the close of business on October 18, 2013.

About Bombardier

Bombardier is the world’s only manufacturer of both planes and trains. Looking far ahead while delivering today, Bombardier is evolving mobility worldwide by answering the call for more efficient, sustainable and enjoyable transportation everywhere. Our vehicles, services and, most of all, our employees are what make us a global leader in transportation.

Bombardier is headquartered in Montréal, Canada. Our shares are traded on the Toronto Stock Exchange (BBD) and we are listed on the Dow Jones Sustainability World and North America indexes. In the fiscal year ended December 31, 2012, we posted revenues of $16.8 billion. News and information are available at bombardier.com or follow us on Twitter @Bombardier.

Challenger, Challenger 350, CS300, CSeries, Flexjet, Global, Global 8000, MOVIA and The Evolution of Mobility are trademarks of Bombardier Inc. or its subsidiaries.

Notes to Editors

The Management’s Discussion and Analysis and the interim consolidated financial statements are available at ir.bombardier.com.

FORWARD-LOOKING STATEMENTS

This press release includes forward-looking statements, which may involve, but are not limited to: statements with respect to our objectives, guidance, targets, goals, priorities, our market and strategies, financial position, beliefs, prospects, plans, expectations, anticipations, estimates and intentions; general economic and business outlook, prospects and trends of an industry; expected growth in demand for products and services; product development, including projected design, characteristics, capacity or performance; expected or scheduled entry-into-service of products and services, orders, deliveries, testing, lead times, certifications and project execution in general; our competitive position; and the expected impact of the legislative and regulatory environment and legal proceedings on our business and operations. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may”, “will”, “expect”, “intend”, “anticipate”, “plan”, “foresee”, “believe”, “continue”, “maintain” or “align”, the negative of these terms, variations of them or similar terminology. By their nature, forward-looking statements require us to make assumptions and are subject to important known and unknown risks and uncertainties, which may cause our actual results in future periods to differ materially from forecasted results. While we consider our assumptions to be reasonable and appropriate based on information currently available, there is a risk that they may not be accurate. For additional information with respect to the assumptions underlying the forward-looking statements made in this press release refer to the respective Guidance and forward-looking statements sections in Overview, Bombardier Aerospace and Bombardier Transportation sections in the Management’s Discussion and Analysis (“MD&A”) in the Corporation’s annual report for the fiscal year ended December 31, 2012.

Certain factors that could cause actual results to differ materially from those anticipated in the forward-looking statements include risks associated with general economic conditions, risks associated with our business environment (such as risks associated with the financial condition of the airline industry and major rail operators), operational risks (such as risks related to developing new products and services; doing business with partners; product performance warranty and casualty claim losses; regulatory and legal proceedings; the environment; dependence on certain customers and suppliers; human resources; fixed-price commitments and production and project execution), financing risks (such as risks related to liquidity and access to capital markets, exposure to credit risk, certain restrictive debt covenants, financing support provided for the benefit of certain customers and reliance on government support) and market risks (such as risks related to foreign currency fluctuations, changing interest rates, decreases in residual values and increases in commodity prices). For more details, see the Risks and uncertainties section in Other in the MD&A of the Corporation’s annual report for the fiscal year ended December 31, 2012. Readers are cautioned that the foregoing list of factors that may affect future growth, results and performance is not exhaustive and undue reliance should not be placed on forward-looking statements. The forward-looking statements set forth herein reflect our expectations as at the date of this press release and are subject to change after such date. Unless otherwise required by applicable securities laws, we expressly disclaim any intention, and assume no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained in this press release are expressly qualified by this cautionary statement.

CAUTION REGARDING NON-GAAP MEASURES

This press release is based on reported earnings in accordance with International Financial Reporting Standards (IFRS). Reference to generally accepted accounting principles (GAAP) means IFRS, unless indicated otherwise. This press release is also based on non-GAAP financial measures including EBITDA, EBIT before special items,EBIT margin before special items, adjusted net income, adjusted earnings per share and free cash flow. These non-GAAP measures are mainly derived from the interim consolidated financial statements, but do not have a standardized meaning prescribed by IFRS; therefore, others using these terms may calculate them differently. Management believes that providing certain non-GAAP performance measures, in addition to IFRS measures, provides users of our interim consolidated financial statements with enhanced understanding of our results and related trends and increases transparency and clarity into the core results of our business. Refer to the Non-GAAP financial measures and Liquidity and capital resources sections in the Corporation’s MD&A for definitions of these metrics and reconciliations to the most comparable IFRS measures.